SRINIVASAN, J.

In this revision petition, the amount in dispute is a sum of Rs. 85,334-46 nP. This represents the purchase value of tanning materials by the assessees who are dealers in tanned hides and skins. According to Item 59 of the Schedule to the Madras General Sales Tax Act, 1959 wattle bark, avaram bark, etc., that is tanning material, are liable to tax at the point of the last purchase in the State. The assessees were taxed on a total turnover including this sum of Rs. 85,334 which represented the purchase value of the tanning materials. When the matter came before the Appellate Assistant Commissioner by way of appeal, the appellate authority accepted the contention of the assessees that they were not dealers in tanning materials and that, therefore no tax could be levied upon the assessees on this turnover. A decision of the Andhra Pradesh High Court in Abdul Bakshi Brothers, Hyderabad v. State of Andhra Pradesh (1960) 11 S.T.C. 526., was relied on in coming to that conclusion.

The Board of Revenue took up the matter in revision suo motu under S. 34 of the Madras General Sales Tax Act, 1959. The Board purported to examine the appellate order. It was of the view that the decision of the Andhra Pradesh High Court does not apply to the case. It observed:

According to the provisions of the Act, even a person who carries on the business of buying only is a dealer as defined in S. 2(g) of the Act. In the present case, the assessees were dealers. They sold tanned skins, bought raw skinsand both the purchase and sale were transactions in the course of their business. Therefore, the dealers who are the last purchasers of tanning materials are liable to tax under the Act. ..

In this view, therefore, the Board set aside the order of the Appellate Assistant Commissioner and restored the order of assessment bringing this sum of Rs. 85,000 and old to tax. The assessees appealed against this order of the Board of Revenue.

The short question is whether the assessees are dealers and whether before the purchase turnover of the tanning materials can be taxed in their hands, should it be further found that the assessees were dealers in those tanning materials

Mr. T.T. Srinivasan, learned Counsel for the assessees, contends that the assessees are not dealers in tanning materials in respect of which they have been taxed, that the tanning materials have been consumed in the course of their other business and that unless it is found that the assessees sold the materials as such, they cannot be regarded as dealers and taxed on this part of the turnover.

There is no doubt that the definition of a dealer would include a person who merely carries on a business of buying goods. The manner in which he disposes of those goods, so far as the definition of the expression dealer goes to show, has no relevance whatsoever. But there is nevertheless the additional requirement of the section that the person should be one who carries on the business of buying. Carries on a business has in several decisions been interpreted to mean that that course of activity should have a profit-making motive. Learned Counsel for the assessees has referred to certain decisions. In The State of Bombay v. Ahmedabad Education Society A.I.R 1956 Bom. 673 [LQ/BomHC/1956/35] =7 S.T.C. 497., an educational society gave a contract to a contractor for the construction of buildings for colleges, residential quarters of the staff and hostels for students. In order to secure a more economical method of construction, the society itself set up a brick factory, manufactured bricks and supplied bricks to the contractor. It was left with a surplus stock of bricks on its hands which the society disposed of to sister educational institutions and other individuals at cost price. The society also obtained a permit to import steel for the purpose of the buildings. After the steel had been imported, the society was able to obtain a permit to buy steel locally. Thereafter, it sold the imported steel as redundant for its purposes. The question arose whether the society came within the definition of a dealer. The learned Judges of the Bombay High Court held that the expression carrying on the business occurring in the Act should be properly construed. On the finding of fact that the sole object of the society was to make bricks for their own buildings and the surplus had to be disposed of, the vital conclusion was reached that the bricks were disposed of without making any profit whatsoever. That consideration could not be ignored. The learned Judges found that there was a clear finding that there was complete absence of a profit-making motive in the activities carried on by the society. While in that view that itself would take the assessees in that case out of the category of dealers, the learned Judges reached that conclusion on other grounds as well.

The next case relied upon is Nagpur Yarn and Dyes Merchants Association v. State of Bombay (1958) 9 S.T.C. 530.That was a case where certain persons dyed yarn brought to them by customers. The Department purported to tax the transaction as one of sale. Apparently reliance was places upon the fact that while yarn was tax-free under the Act, dyed yarn was not specifically declared to be tax-free. The ratio of the decision was merely that yarn does not cease to be tax-free merely because ibis dyed. The learned Judges took the view that in that particular case, it was only charges for labour that was covered by the payment made by the customer. This decision has been pressed into service by the learned Counsel for the purpose of indicating that in that case the dye-stuff used by the assessees was consumed in the process of dyeing. A somewhat analogous argument is advanced in respect of the tanning materials used in the present case. We are not however sure what the decision of the Bombay High Court might have been if the dye-stuff used by the assessees in that case had been taxable at the purchase point in the hands of the dealers. This decision is therefore not of much use in the present context.

In The State of Madhya Pradesh v. Bengaland Nagpur Cotton Mills, Ltd., (1961) 12 S.T.C. 333., the expression carries on a business again came to be considered. It was held that in order to constitute a person a dealer, he must be engaged, whether as principal or agent, in the business of selling or supplying goods. So far there is no difficulty. The learned Judges proceeded further to hold that it is not sufficient that the sales is by a dealer carrying on the business of selling or supplying some commodity but that the business of the dealer must be selling or supplying the particular commodity sought to be taxed and that otherwise he cannot be regarded as a dealer in relation to that commodity. Reference was made in this context to The State of Bombay v. Ahmedabad Education Society A.I.R. 1956 Bom. 673 [LQ/BomHC/1956/35] =7 S.T.C. 497. already referred to. In that case also, the mills, the assessee in question, gave a contract to certain contractors for the construction of some buildings. The mills obtained the steel and cement required for the constructions and handed over the materials to the contractors. The price of the material was debited to the contractors account. It was this supply of the material by the mills to the contractors that was sought to be regarded as a sale by the Department. The Bombay decision was relied upon and on the finding that the transaction was not one carried on in the course of business, the result followed that the assessees could not be taxed.

It seems to us that none of the above decisions deals with the point that we have to deal with in the present case. The aseessees are undoubtedly dealers in hides and skins. They purchased the tanning materials for the purpose of tanning raw hides (which also they purchase) and selling the tanned product. It is impossible to say that the purchase of the tanning materials is wholly devoid of profit-making motive. The use of the tanning materials in the tanning process contributes to the making of profit as a dealer and it should therefore follow that even the business of purchasing these tanning materials Involves the profit motive. If the existence of the profit motive in entering into the trans-action brings the series of transactions within the expression in the course of business, there seems to be no room for doubt that the process of buying had the profit motive as a necessary ingredient. In Abdul Bakshi & Brothers, Hyderabad v. State of Andhra Pradesh (1960) 2 An. W.R 108=11 S.T.C. 526. a similar question arose. The learned Judges however held that unless the dealer is one who is carrying on a business in the particular category of articles, he cannot be assessed to tax on the purchase of the tanning bark. In that case also, the purchase turnover of tanning bark was liable to tax in the hands of the dealers and the contention that the assessees were not dealers in that community was raised. The judgment is very short. The learned Judges merely observed;

It is manifest that embassies is laid by this rule on the assessee dealing in goods which are enumerated in the rule. It is not enough if he is a dealer in the sense that he carries on some business. For attracting this rule, the assessee must be carrying on business in the particular category of articles specified in the sub-rule. It would be straining the language of the rule to interpret it as applying to any dealer who is doing some business. In our opinion, it is only an assessee doing business in the particular type of goods mentioned therein that would be governed by this rule. The mere purchase of some goods for consumption would not bring it within the ambit of R. 5. The profit motive must be with regard to the commodities in regard to which the impost is sought to be levied. There can be little doubt that the expression business in the definition of dealer is used in a commercial sense. A person who buys large quantities of any category of goods for the purpose of consumption or for any other purpose unconnected with the business in that commodity cannot be regarded as a businessman within the mischief of R. 5.

In that case also, the assessee purchased tanning bark for use in the process of tanning raw hides and skins which they sold. The contention of the assessees was that they were not dealers in that commodity, while the Department maintained that since the assessees were dealers within the purview of S. 2(e) of the Hyderabad General Sales Tax Act, 1950, the bark purchased by them for use in the process of tanning hides and skins was exigible to tax, although the assessees might not have been engaging them selves in the sale of tanning bark. Despite the fact that the definition of a dealer in the relevant section included a person engaged in the business of buying goods and the tax in respect of tanning bark was leviable on the purchase, the learned Judges came to the conclusion indicated above. With great respect we are unable to follow the decision. Under the Madras General Sales Tax Act also dealer means any person who carries on the business of buying, selling, sup-plying or distributing goods directly or otherwise. In so far as the definition is concerned, the buying of the goods must be in the course of business, which decisions have interpreted to mean that it should be associated with the profit motive. It does not appear to be necessary that having bought goods the dealer should sell them as such. It may be that the dealer is engaged in the production of goods in the course of which the goods which he purchased are utilised and converted into other goods or are necessary ingredients in the manufacture of the goods sold. It seems difficult to see why the purchase should be deemed to be devoid of the profit motive in an integrated transaction of that nature. Again, goods have also been defined to mean all kinds of movable property other than excepted items and to include all materials commodities and articles including those to be used in the fitting out, improvement or repair of movable property. If therefore the goods which the assessee purchases are goods which he utilises for the purpose of improvement of other movable properties which he sells, reading the definitions of dealer and goods together, it would appear to follow that the purchase itself is in the course of the business, whether the identical goods as purchased are sold or not. We may instance the purchase of groundnut. Groundnut is taxable on purchase and it has never been contended as far as we are aware that because groundnut is consumed in the process of manufacture of oil and the assessee is a dealer in oil in the sense that he sells that oil and does not sell the groundnut as such, the purchase of groundnut is not in the course of the business of the dealer. Giving the matter careful attention, we are not satisfied that by the mere fact that the goods purchased by the dealer are consumed in the course of production of other goods, he does not come within the definition of dealer.

Mr. T.T. Srinivasan, learned Counsel for the assessees, argues that in so far as the expression goods is defined to include goods to be used in the fitting out, improvement or repair of movable property, that part of the definition cannot be attracted. He does not deny that tanning material in the present case is used in the improvement of leather, but nevertheless he contends that tills part of the definition was put in to cover works-contracts which after the decision of the Supreme Court has been rendered not taxable. It is however noteworthy that in the Madras General Sales Tax Act, 1959, the sale of goods involved in a works contract is no longer taxable, but nevertheless the definition of goods, continues to be framed in the above manner. It was quite clearly intended for the purpose of covering cases of the present kind where the goods are those not sold but are utilised in other processes resulting in a produce which the dealer sells. It seems to us therefore that the profit motive is inherent even in the purchase transaction.

Learned Counsel argues that if a dealer purchases kerosene oil for illuminating his premises and if kerosene oil should be taxable on purchase, it would be illogical to tax a dealer when the goods are used for the purpose of his consumption. This illustration certainly does not fit in with the present picture. In the case of such a dealer, it is his domestic consumption that is contemplated and is not a purchase as a dealer. If that distinction is borne in mind, the purchase which necessarily goes into the composition of the goods that he sells is in the coarse of the business as a dealer and as undeniably the necessary profit motive therein.

It follows therefore that the assessment in the present case was correctly made. The appeal fails and is dismissed with costs. Counsels fee, Rs. 100.